TAP Q2 Deep Dive: Premiumization Efforts and Industry Headwinds Shape Outlook

Beer company Molson Coors (NYSE:TAP) announced better-than-expected revenue in Q2 CY2025, but sales fell by 1.6% year on year to $3.20 billion. Its non-GAAP profit of $2.05 per share was 13.1% above analysts’ consensus estimates.

Is now the time to buy TAP? Find out in our full research report (it’s free).

StockStory’s Take

Molson Coors delivered second quarter results that surpassed Wall Street’s expectations for both revenue and non-GAAP earnings per share, prompting a positive reaction from the market. Management attributed the quarter’s performance to sustained momentum in its core power brands—Coors Light, Miller Lite, and Coors Banquet—as well as early gains from premiumization initiatives and the integration of the Fever-Tree acquisition. CEO Gavin Hattersley explained that, despite a challenging U.S. beer market and unfavorable weather during key holidays, the company’s brands retained most of their recent shelf space expansion. Hattersley noted, “Banquet in particular, has been a strong performer,” highlighting the brand’s continued distribution growth.

Looking ahead, Molson Coors’ guidance reflects ongoing industry softness, elevated input costs, and continued uncertainty around consumer confidence, especially in the U.S. Management expects the company’s premiumization and innovation strategies—such as expanding Peroni and non-alcoholic product offerings—to help offset some pressures, but remains cautious on the pace of recovery. CFO Tracey Joubert emphasized, “Our top line guidance now assumes the U.S. industry is down 4% to 6% for the second half of the year.” The company will focus on cost discipline and targeted marketing investments while monitoring consumer behavior and macroeconomic developments.

Key Insights from Management’s Remarks

Management highlighted the dual impact of persistent U.S. market challenges and progress in premiumization and new product development across regions.

• Core brands retained share: Molson Coors’ mainstay brands—Coors Light, Miller Lite, and Coors Banquet—held onto their shelf space gains from 2024, collectively reaching a 15.2% volume share for the first half of the year. Banquet continued to outpace peers in distribution growth and volume performance, with management citing its potential for further expansion.
• Premiumization traction and expansion: The company’s efforts to move upmarket, particularly with brands like Peroni in the U.S. and Madri in Europe, showed early positive results. Peroni posted double-digit volume growth in the U.S., while Madri became the second-largest brand in its segment in the U.K. Fever-Tree’s integration also contributed to a positive brand mix in the Americas.
• U.S. industry headwinds: Prolonged weakness in the U.S. beer market persisted, driven by macroeconomic pressures on lower income and Hispanic consumers, and exacerbated by severe weather during the Memorial Day weekend. Management stressed that consumer caution remains widespread.
• Input cost volatility: A sharp, unexpected escalation in the Midwest Premium aluminum cost—a key input for beverage cans—added significant expense, with management pointing to the difficulty in hedging this opaque and illiquid market. The company expects these costs to remain elevated in the second half of the year.
• Portfolio innovation and non-alc growth: New product launches in higher-alcohol and non-alcoholic categories, such as Blue Moon Extra, Blue Moon non-alc, and Topo Chico MAX Margarita, are aimed at capturing changing consumer preferences and broadening consumption occasions. Fever-Tree’s distribution expansion in the U.S. is seen as a key growth driver.

Drivers of Future Performance

Molson Coors’ outlook is shaped by persistent industry softness, input cost pressures, and an ongoing focus on premiumization and brand innovation.

• Continued industry volume decline: Management projects that U.S. beer industry volumes will remain under pressure, forecasting a 4% to 6% decline in the second half of the year. This expectation reflects ongoing macroeconomic challenges and subdued consumer confidence, particularly among value-driven segments.
• Premiumization and innovation focus: The company plans to further invest in above-premium brands—such as Peroni, Madri, and Fever-Tree—as well as non-alcoholic offerings and high-ABV (alcohol by volume) innovations. These initiatives are expected to drive mix benefits and support revenue resilience despite overall volume declines.
• Margin headwinds from input costs: Elevated Midwest Premium aluminum costs and ongoing volume deleverage are expected to weigh on margins. While productivity improvements and cost savings are planned, these will be offset by higher input costs and continued investment in marketing and product innovation.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will be watching (1) the effectiveness of premiumization efforts—especially the expansion of Peroni, Madri, and Fever-Tree in new markets; (2) the company’s ability to manage elevated input costs, particularly Midwest Premium aluminum pricing; and (3) signs of stabilization or improvement in U.S. beer industry volumes. Execution on non-alcoholic and high-ABV innovations will also be key indicators of strategic progress.

Molson Coors currently trades at $51.29, up from $48.63 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

High Quality Stocks for All Market Conditions

Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.

Take advantage of the rebound by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.